The merger between Kookmin and Korea Housing bank was remarkable because the biggest bank ever existed in Korea was established through the merger. Of course, the purpose of that merger was to create synergy effects as that of other mergers. But, many industry specialists doubted whether it could really create synergy effects.
In this paper, the synergy effects of a merger between Kookmin and Korea Housing bank was measured by mean adjusted return method. By mean adjusted return method, abnormal return to the stockholders that arises by the merger event was measured and that return was considered as ‘Synergy effects’ expected by stockholders. Ant then, the abnormal return was converted to the amount of cash flow through which we could estimate how big the synergy effects are. But, only the fact that stockholders expect synergy effects to the merger does not justify that this merger is worth of being promoted. So, in this paper, operational efficiency of those two parties was measured and the effects of improvement of operational efficiency were compared with the synergy effects. By doing this job, we could see whether this merger is worth of being promoted and if there are ways other than mergers that can increase the stockholder’s value.